Two Visions of the 21st Century Skilled Nursing Facility

The skilled nursing world is in upheaval, but too many providers are complacently running the skilled nursing facility of yesterday rather than creating a successful model for the future.

That’s according to Anne Tumlinson, founder of consultancy Anne Tumlinson Innovations and a nationally recognized authority on post-acute and senior care. She previously led Medicaid oversight at the Office of Budget and Management, founded the post-acute and long-term care consulting practice at Avalere Health, and has testified on senior care issues before the U.S. Congress.

She will be presenting at the National Investment Center for Seniors Housing & Care (NIC) Spring Investment Forum in Dallas this week, and spoke with Skilled Nursing News about some of the ideas and information she is bringing to the event.

“We don’t know what the 21st century SNF is, but we know what it isn’t,” she told SNN.

The traditional, institutional skilled nursing facility that relies on fee-for-service revenues is becoming unsustainable for several reasons, including large-scale demographic and health care system changes that have been underway for several years, she argued. As the population ages, Medicare and Medicaid spending is set to soar, creating an ever-more pressing need to control costs.

The federal government has already taken steps on this front, implementing alternative payment models that incentivize providers to work together to cut costs while improving quality. In addition, Medicare Advantage has tremendous momentum, putting providers in the position of negotiating with private sector insurers with high expectations around costs and outcomes. All of this means that SNFs cannot exist in a silo, but need to prove their value in the health system in order to win patients and residents who otherwise might receive care at home or in other low-cost settings.

Given this environment, a few possibilities emerge for what the SNF of the future might look like, in Tumlinson’s estimation.

One model is a skilled nursing facility that is a service delivery and care management hub, becoming a key referral partner for risk-bearing entities. This risk-bearing entity might be an accountable care organization (ACO) or provider network that risks having Medicare reimbursements reduced if quality and cost thresholds are not met, and is rewarded if those goals are achieved.

To achieve those objectives, the risk-bearing entity is seeking to partner with post-acute providers that can deliver on key metrics, such as reduced hospitalizations and shorter length-of-stay.

A SNF of the future therefore must be able to do sophisticated market-level analyses, to make a case for why they can address pain points of potential referral partners. These SNFs must also have other capabilities and services that provide value to the risk-bearing referrers.

These might include: on-site primary care delivered by nurse practitioners or physicians; targeted clinical programs that may focus on particular conditions such as cardiac care or orthopedics; transitional care capabilities to help facilitate smooth patient transfers and keep data flowing among providers in a network; and overarching care integration.

To become so multi-faceted, the SNFs will almost certainly have to partner with “enablers,” such as technology companies and home care, Tumlinson said.

The case might be strong for this model of a 21st century SNF, but there are some sticking points. In particular, there might not be enough referrals to support inpatient skilled nursing care. The drive to reduce costs already has more patients receiving services in the home rather than in more expensive facilities.

“How can there be a 21st century SNF if there are no inpatient services?” Tumlinson said.

With this in mind, she painted another picture. The SNF company of the future might have to take on more risk by managing the overall health care spend — essentially, becoming a sort of mini-health care system, complete with an insurance component.

The concept here is that the business shifts away from a “heads in beds” revenue model, giving the SNF provider more breathing room and flexibility from a financial perspective. At the same time, the company would gain greater control over care pathways within the network. Rather than seeing a high volume of patients bypassing the skilled nursing facility due to decision-makers outside the SNF organization, the integrated system could devote resources to identifying those that are appropriate for SNF care and managing referrals accordingly.

Of course, a drawback to this approach is that it requires a tremendous amount of expertise and resources, and it does not seem to be a viable option for mom-and-pop providers, Tumlinson acknowledged. If this is indeed the SNF of the future, these smaller organizations might vie to be acquired or otherwise partner up with the bigger players.

These are not the only potential models for a 21st century skilled nursing facility, she emphasized. Her message to providers is not that they must adopt a particular model, but rather that they need to urgently consider their options and adapt to changing market conditions.

“They can’t do business as usual,” she said. “Believe it or not, that’s still a surprise to many providers. They haven’t thought about the fact that they’ve got to make some really radical changes in what they do.”

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